The Wages of Destruction: The Making and Breaking of the Nazi Economy

by Adam Tooze

Hitler’s government, however, this recovery in the business sector was offset by a severe contraction in the real value of household consumption. And even in 1934, when one might have expected the recovery in the labour market to have powerfully stimulated household consumption –the famous ‘knock-on effect’ from work creation expenditure predicted by Keynesians–it in fact made no more than a modest contribution to the progress of the overall economy.80 Though our ability to measure consumption is limited, this pessimistic story is confirmed by other indicators, such as the indices for turnover in retailing.81 Sales of food, clothing and other household necessities did not pick up significantly until six months after Hitler took power. This is hardly surprising, when we bear in mind that the real wages of many workers fell quite sharply in 1933, as wages stagnated and prices for food began to rise. Nor was the lagged development of consumption lost on contemporaries.